http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/142988/index.do
Tse-Lam v. The Queen (March 10, 2016 – 2016 TCC 61, Bocock J.).
Précis: The taxpayer failed to disclose rental income in 2006, 2007 and 2008 arising in Hong Kong from a trust connected with the estate of her late mother. In 2010 she filed, through her accountant, a voluntary disclosure and was assessed tax and interest but not penalties. She appealed the assessment to the Tax Court, essentially arguing that the amounts should not be taxable in Canada. The Tax Court dismissed the appeal with costs fixed conditionally at $250.
Decision: The taxpayer, who was self-represented, made arguments that were difficult to follow:
[10] The arguments submitted by Ms. Tse-Lam to the Court in support of her appeal may be summarized, with generous amplification, as follows:
1. The Income Tax Act requires a Canadian taxpayer to disclose annually all foreign income in respect of property held in excess of $100,000.00. Ms. Tse-Lam never possessed such amounts of property because of the Hong Kong testamentary trust. Therefore, Ms. Tse-Lam asserts she was never required to file a T-1142 disclosing foreign property holdings. Similarly, she was and is not required to report such rental property income because the sum remains less than the $100,000.00 threshold annually;
2. A “Trustee Ordinance” does not require a beneficiary to report income received through, or by virtue of, a foreign trust;
3. The moneys within the testamentary trust have been taxed in Hong Kong and should not be taxed in Canada as well; and,
4. Ms. Tse-Lam is not able to pay the taxes and interest.
The Tax Court did not accept any portion of the taxpayer’s arguments:
[12] The evidence is clear, by virtue of her own authorized (at the time at least) voluntary disclosure, that Ms. Tse-Lam received the rental property income during the taxation years.
…
[10] The arguments submitted by Ms. Tse-Lam to the Court in support of her appeal may be summarized, with generous amplification, as follows:
1. The Income Tax Act requires a Canadian taxpayer to disclose annually all foreign income in respect of property held in excess of $100,000.00. Ms. Tse-Lam never possessed such amounts of property because of the Hong Kong testamentary trust. Therefore, Ms. Tse-Lam asserts she was never required to file a T-1142 disclosing foreign property holdings. Similarly, she was and is not required to report such rental property income because the sum remains less than the $100,000.00 threshold annually;
2. A “Trustee Ordinance” does not require a beneficiary to report income received through, or by virtue of, a foreign trust;
3. The moneys within the testamentary trust have been taxed in Hong Kong and should not be taxed in Canada as well; and,
4. Ms. Tse-Lam is not able to pay the taxes and interest.
The Court made a modest, but conditional, award of costs against the taxpayer:
[16] While there were no submissions on the issue of costs, this was a General Procedure appeal and the Respondent is otherwise entitled to costs. In the circumstances, costs are fixed at $250.00, which is well below the tariff applicable. These fixed costs are subject to the Respondent’s right to make further submissions in writing within 30 days of the date of these reasons and corresponding judgment.